MA Redcape Hotel Fund has reversed its run of divestments with purchase of three hotels in coveted southeast Queensland, to further its portfolio refresh and optimisation.
The prior calendar year continued a shake-up of the Redcape stable that saw multiple assets divested.
In April the group sold its Crescent Hotel in gaming heartland Fairfield to Gallagher Hotels, while taking on that group’s lease on the Criterion in the Sydney CBD.
In July it passed the keys of the Kings Head Tavern to the Melbourne-based Francis Venues and both the Australian Hotel and Brewery in Rouse Hill and former #1 Eastwood Hotel to Meers’ Sonnel.
September brought sale of the Wattle Grove, also to Tom Francis, for $31 million, and Granville’s Vauxhall Hotel, sold to Orion for circa $42 million. These transactions bolstered the investment fund’s financials and specifically facilitated the payment of redemptions.
The end of the year brought the record-setting sales to Iris of the Cabramatta Hotel and El Cortez at Canley Vale, for a total reported at circa $180 million.
Traditionally centred in NSW, the group has been expanding into SEQ and in December added to the local collection with the freehold going concerns of the Lucky Tree Tavern in Durack, Willow Hotel in Moorooka, and the Commercial Hotel in Redbank, for a total investment of $66 million.
Lucky Tree provides a sports bar, bistro, gaming, functions and bottleshop. Recently refurbished, the Willow Hotel offers public bar, bistro, gaming and live sports on big screens.
They were sold by publicans Peter Braithwaite and Brendan Lawless, through HTL Property’s Daniel Dragicevich, Glenn Price and Andrew Jolliffe.
The Commercial consists of public bar, bistro, adjoining outdoor dining area, gaming with 24 machines, and walk-in bottleshop.
It was acquired from industry principal Patrick Ryan and former CUB CEO Peter Filipovic, who teamed up in 2022 for a pub venture. The sale was through HTL Property in conjunction with JLL Hotels.
This transaction represents another step in Redcape’s strategy for renewing and diversifying its portfolio, with a goal of driving earnings and distribution growth. The fund cites a deliberate focus on delivering investors consistent distributions and capital growth, through strategic investment and active portfolio hygiene, which MD Chris Unger notes “may also include the divestment of some assets”.
“These acquisitions are right in line with our strategy to enhance our returns for investors by targeting high-potential venues in growth markets through actively managing the portfolio.
“We will look to continue to acquire assets with a particular emphasis on properties that offer significant potential for redevelopment and refurbishment, in order to unlock value.”
Reporting strong operating figures, with like-for-like venue earnings increasing 11 per cent against the corresponding prior periods, generated the confidence to similarly increase the March 2025 distribution target 11 per cent, to 2.5 cents, representing an annualised 10.0 cents per unit.
After the protracted Queensland settlement period, the group took operational control of all three new assets prior to Christmas, tipping it has “additional venues under advanced due diligence”.
The strategy to unlock value through capital investment is said to be on track “to outperform”, with completed projects consistently achieving returns greater than 20 per cent.
“Pubs have been trading really well, which has continued in the lead-up to Christmas,” furthers Unger, who is optimistic about the sector.
“Pubs aren’t just great assets – they’re enduring cornerstones of communities, where people come together for connection and entertainment.
“We’re on track to deliver on our strategy to increase distribution yield for investors and continue to build on our total return track record with sustained long-term growth.”
Now sporting seven hotels in the Sunshine State, from Brisbane to Townsville, the aim is to capitalise on the historically undervalued nature of quality assets in SEQ.
“The market has seen a shift in the thinking regarding successful buyers in FY25 across Queensland, with purchasers prepared to be more active regarding their search for assets so as to augment their respective portfolios, going beyond the traditional yield thresholds that have been determined over recent years,” offered Price, HTL’s representative in the state.
HTL MD Jolliffe added that the flurry of sales in December reset benchmarks across most states, and bode well to a positive outlook for the new year ahead.
“With gaming machine authority values across Queensland at an all-time high, and both on- and off-premise trade continuing to grow year on year, the Queensland hotel sector has become even more desirable to key industry players across the nation, with large corporate groups, institutional investors and private syndicates driving the market,” adds Price.
